The crypto winter may be over but its effects are still being felt throughout the industry. Recently, Bithumb, South Korea’s largest crypto exchange released its annual financial report. The report was a disappointment as the company reported a net loss for the financial year 2018, although it was expected that it would be a tough year due the conditions in the market, a loss of such magnitude was a shock to many. Some of this can be attributed to hacks suffered by the exchange over the last two years, but the loss figures are staggering, almost 50 percent of their total revenue.
Annual report
It was revealed in the company’s annual financial report that it suffered a total loss of 205.5 billion won or $180 million in the financial year 2018. Their revenue was 391.7 billion won, up 17.5 percent from 333.4 billion a year ago. Operating profit fell 3.4 percent to 256.1 billion won from 265.1 billion won a year earlier, operating expenses increased from KRW 68.3 billion to KRW 135.6 billion and non-operating expenses increased from KRW 4.1 billion to KRW 381.9 billion. BTC Korea.com, the parent company of Bithumb said the main reason is the increase in infrastructure investment, labor costs, and the volatility in the price of cryptocurrencies.
Layoffs
Around 50 percent of the current employees will be let off by Bithumb as a part of the cost-cutting measure. The company confirmed that the process will be voluntary and those departing will mostly be employees who already want to leave the company. When contacted, a company official replied “Voluntary retirement is part of our support program for former employees and is intended to provide assistance and training for job placement,” said the Bithumb official. “Apart from that, [Bithumb’s] trading volume has decreased compared to the previous year, [so] we are trying to provide internal measures. We will continue to add necessary personnel for various new businesses”. The move is similar to the decisions taken by other cryptocurrency companies that have been forced to respond due to the ongoing decline in value of cryptocurrencies in recent months.
Third hack
A lot of the losses were attributed to the hacking that the company experienced. Bithumb admitted to getting hacked again on March 29, Friday. During the last three years, this is the third time such an incident was reported by the platform. According to the statement of a Bithumb official around 10:15 pm local time, the company detected abnormal withdrawals from its hot wallets, these are the accounts used to support real-time transactions. The company refused to disclose how much currency it had lost in the incident. However, the cryptocurrency industry insiders tracked down the large transactions leaving the exchange’s wallet addresses around the said time. Based on this evaluation, the attackers appear to have stolen 20 million Ripple coins (XRP), worth $6 million and another three million EOS, worth around $13.4 million at the time of the hack. The first hack experienced by the exchange happened in July 2017, when hackers stole $7 million in Ethereum and Bitcoin. While the second incident took place in June 2018, when hackers took $31 million worth of Ripple coins(XRP).
Considering the fact that many companies in the crypto industry had faced shutdown in the last year, still being in operation itself is a monumental task achieved by Bithumb. And it seems the crypto winter is over as prices are picking up and big investors are entering the market recently. Along with a favorable market condition and the cost-cutting measures initiated by the company, we can expect it to turn profitable this year itself. Follow us on Twitter, Facebook, Steemit, and join our Telegram channel for the latest blockchain and cryptocurrency news
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